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2 Brune oir H GO...... January 24, 2020 sETT! MENT PROPOSAL, VIA |AIL, HAND DELIVERY and FIRST CLASS U.S. MAIL The Honorable Brenda Bozeman Mayor, Town of Leland 102 Town Hall Drive Leland, NC 28451 (bbozemani@townofleland.com) ‘The Honorable Pat Bateman Mayor Pro-Tem, Town of Leland 102 Ton Hall Drive Leland, NC 28451 (batleman@townofleland com) RE: 12G0 Litigation Dear Mayors Bozeman ard Mayor Pro-Tem Batleman, On December 2, 2019, the two newly elected Commissioners of the H2GO Board were installed. The 12GO Boad then elected officers and appointed a new Litigation Committee to manage the pending litigation involving the Town of Leland, Town of Belville, and H2GO. Ron Jenkins was elected as Chair of H2GO and to act as a member of the Litigation Committee. The newly constituted Litigation Committee turned its attention immediately to finding a means by which to resolve the dispute and bring the pending litigation to an end, This letter will present the Town of Leland with a settlement proposal from H2GO that will fully resolve the pending litigation and, importantly, provide a clear and unobstructed path by which the people serviced by H2GO will be provided with clean water untainted by the contaminants in the Cape Fear River P.O, Box 2230 910.371.9949 (Office) Leland, NC 28451 \wonv.H2GOonline-com 910-371-6441 (Fax) January 24, 2020 ‘SETTLEMENT PROPOSAL Page 2 ‘The Town of Leland commenced the pending litigation in 2017. The claims asserted in the litigation seek, on a ruber of alternative bases, to obtain the same relief — (1) a declaration that action taken by an outgoing Board of H2GO to transfer substantially all of the assets of H2GC to the Town of Belville was unlawful and invalid, and (2) an order and injunction effectively reversing the transfer. The outgoing Board of H2GO hhad made the transfer shortly after an election and before newly elected members of | the Board were installed. In addition to seeking to have the transfer effectively reversed, the Town of Leland included a request that it be awarded the costs and attomey’s fees incurred it filing and pursuing the claims. Cireumstances have changed substantially since 2017. First, understanding and public awareness of and concern for the presence of contaminants in the Cape Fear River (that is, GenX), which is the primary source from which H2GO obtains water, has developed and become acute. Indeed, strong. public support exists for the construction of an aquifer-sourced RO Plant by H2GO. Seventy percent (70%) of the eligible voters who are customers of H2GO and who live in the Town of Leland voted for the two new H2GO Commissioners who ran for office on a single-issue platform — completing construction of the aquifer-sourced RO Plant. Additionally, soth the Town of Leland and the Town of Belville have made statements supporting construction of the RO Plant. The elear mandate that all of us, as the elected representatives of the Towns of Leland and Belville and H2GO, have received from our constituents is to construct the aquifer-sourced RO Plant. Second, the trial Court has ruled in favor of the Town of Leland on three dispositive claims (out of eleven total claims) asserted in the pending litigation. On this basis, the trial Court has granted the Town of Leland the relief requested, including a Permanent Injunction that effectively reverses the challenged transfer. The Town of Belville has appealed to the North Carolina Court of Appeals from these rulings. In response, the Town of Leland has cross-appealed from the rulings on two of the claims on which the Court ruled in favor of the Town of Belville. Importantly, the Town of Leland does not seek relief from these two claims that is in addition to or different from the relief sought — and granted — by the Court on the other claims. ‘Thus, so long as H2GO end the Town of Belville comply with the Permanent Injunction and actually reverse the transfer, restoring the status quo that existed before the transfer, no public purpose will be served by continuing to commit resources and money to pursuing the claims that have been appealed January 24, 2020 SETTLEMENT Page 3 PROPOSAL Finally, 12GO has been assured that the Town of Belville is ready, willing and able immediately and unconditionally to reverse the transfer of assets that occurred in 2017, and H12G0 is ready, willing and able to accept the transfer from the Town of Belville, Reversing the Cansfer in this manner will fully restore not only the assets of H2GO to H2GO, but «Iso the power and ability of H2GO to operate without interference or impairment from the Town of Belville. With these changes in mind, 12GO hereby presents the terms of the following proposal to the Town of Leland to resolve fully the dispute over the transfer that ‘occurred in 2017 and the related pending litigation: ‘The Town of Belville will transfer back to H2GO all of the assets transferred by H2GO to the Town of Belville in 2017. This transfer will oecur contemporaneously with the execution of a written settlement agreement. The transfer will be complete, unqualified, and ‘without any conditions or reservations of any rights or powers by the Town of Belville. By making the transfer, H2GO and the Town of Belville eflectively will be complying with the related provisions of the Permansnt Injunction and, thereby, implementing the primary relief requested by the Town of Leland in the pending litigation Although H2GO and the Town of Belville dispute the request for costs, and attorney's fees made by the Town of Leland, to compromise and resolve the dispute and pending litigation, H2GO will agree to pay the ‘Town of Leland $800,000.00 toward the costs and attorney's fees incurred by the Town of Leland in filing and pursuing the litigation, ‘The paymeat will be made within thirty (30) days of the execution of ‘4 written settlement agreement, ‘The Towns of Leland and Belville and H2GO will have the appeals that have been filed with the Court of Appeals withdrawn by counsel within ten (10) days of the execution of a written settlement agreement. In the meantime, the parties each will direct counsel to seek an additional extension of time from the North Carolina Court of Appeals to file the required record on appeal. No party will seek t0 recover costs or attorney's fees in connection with these appeals or otherwise and shall waive same in the Settlement Agreement. January 24, 2020 SETTLEMENT PROPOSAL Page + ©The Towns of Leland and Belville and H2GO will jointly move the Court in the pending litigation to modify the preliminary injunction that was entered on December 28, 2017 to remove and delete deeretal paragraph 8, which prohibits H2GO and the Town of Belville from constructirg or making arrangements to construct the RO Plant permitted by NPDES Permit NCO089613. Additionally, if deemed necessary by counsel for any party, The Towns of Leland and Belville and H2GO will jointly move the Court in the pending litigation to approve the settlement © The Town of Leland will withdraw, with prejudice, the claim in the pending litigation asserting that H2GO violated the North Carolina Open Meetings Law as well as the request that the Town of Leland has made for ests and attorney's fees. + ‘The Town of Leland will agree to ficilitate and not to oppose, obstruct or impair, diretly or indirectly, the construction and operation by H2GO of the RO Plant permited by NPDES Permit NC 0089613. ‘+ The settlement will be expressed in a written settlement agreement that will contain generally accepted miscellaneous provisions and that will be subject to approval by the governing bodies of the Towns of Leland and Belville and H2G0. ‘We submit that resolving the dispute in this manner will be substantially beneficial to the Towns of Leland and Belville and H12GO. It will enable the Town of Leland to achieve all its objectives in the pending litigation and compensate the Town of Leland for the costs and attorney's fees incurred in filing and pursuing the pending litigation, It will avoid the need for any of the parties to incur the further substantial costs of pursuing appeals and litigation for no public purpose or gain. It will enable 112G0 to proceed without further delay with the construction of the aquifer-sourced RO Plant, which is vitally important to our constituents and customers. And it will free all of us to turn our attention to other important needs of our constituents and customers. H2GO has been assured that the Town of Belville is supportive of this Settlement Proposal. A copy of this letter is being sent directly to Mayor Allen, January 24, 2020 SETTLEMENT PROPOSAL. Page 5 Unless withdrawn before then, this proposal will remain open until February 21, 2020. IF itis not accepted by then, it will be deemed rejected and, in any event, ‘withdrawn without further aetion by or notice from H2GO or the Town of Belville ‘Thank you for your attention to this letter and proposal. We will await your reply. Respectfully, Ron Jenkins Chair, H2GO ‘The Honorable Mike Allen (Wallen49@bellsouth.net) Bob Walker, Executive Director H2GO (bwalker@H2GOonline.com) Joseph 8. Dowdy, 339. ({dowdy@ kilpatricktownsend.com) Charles 8. Baldwir, 1V, Esq. (chaldwin@brookspieree.com) ‘Stephen E. Coble, #sq, (scoble@coblelawfirm,com) Donalt J. Bglinton, Fsq. (dje@wardandsmith.com)

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